North Korea’s satellite launch, planned as a celebration of the centenary of the birth of its founding President, Kim Il Sung, failed sometime shortly after 7:40 a.m. Friday when the first stage of the Unha-3 rocket dropped to the Yellow Sea about 165 km west of Seoul. After weeks of antagonism between North Korea and the U.S., South Korea and Japan, who said the launch was the equivalent of a ballistic missile test, the failure offered a moment of respite. “At no time were the missile or the resultant debris a threat,” noted a statement from the North American Aerospace Defense Command. In a rare admission, North Korea’s state-run news service acknowledged the satellite “failed to enter its preset orbit.” It said technicians were investigating the cause.

But the ballistic bust does not mean that North Korean threat has lessened significantly. The isolated authoritarian state still possesses significant conventional artillery with which it could attack Seoul, just 55 km south of the demilitarized zone that separates North and South Korea. “I don’t think we should be taking great sigh of relief that the test failed,” says Rory Medcalf, director of the Sydney-based Lowy Institute’s international-security program. “I don’t think the fundamental issue is about North Korea’s ability to reach the U.S. From a regional perspective the fact is that North Korea can wreak havoc on South Korea and do a lot harm to Japan. There the insecurity is very much alive.”

And today’s embarrassment could give the North further incentive to provide a display of military prowess, possibly in the form of a nuclear test. That was the pattern in 2009, when a North Korea followed up a failed satellite launch with a nuclear test, its second. One year later North Korean forces sunk a South Korean naval vessel, killing 46 seamen, and then months later shelled a South Korean island, killing two soldiers and two civilians. It was only in 2011 that Pyongyang began a series of discussions that led to the Feb. 29 “leap-day deal,” in which it would curtail nuclear activities and missile tests in exchange for U.S. food aid. The U.S. has said that deal is dead.

Analysts say North Korea’s satellite plan was driven by domestic concerns, particularly strengthening the position of 29-year-old leader Kim Jong Un, who was installed after the death of his father, Kim Jong Il, in December. “This is actually more sensitive than the failure of the previous two tests in 1998 and 2009 for a few reasons,” says Medcalf. “First, obviously there’s a need for [Kim Jong Un] to assert his credibility as a strong leader and do it in front of the people of North Korea. Second is the weight of expectations for the 100th anniversary celebrations. This is such a big weekend, and the political pressure to demonstrate his prowess is greater.”

The U.S., South Korea and Japan have denounced the North Korean launch. “North Korea is only further isolating itself by engaging in provocative acts, and is wasting its money on weapons and propaganda displays while the North Korean people go hungry,” read a White House statement. “North Korea’s long-standing development of missiles and pursuit of nuclear weapons have not brought it security — and never will.”

The collapse of the leap-day deal and North Korea’s launch are a political liability for President Obama, who entered office as an advocate of talks with Pyongyang. Mitt Romney, the likely Republican challenger in this fall’s presidential race, called the leap-day deal “as naive as it was short-lived,” adding, “This incompetence from the Obama Administration has emboldened the North Korean regime and undermined the security of the United States and our allies.”

For now, the U.S. has returned to a familiar bind over North Korea. “After the failure of the leap-day agreement and given upcoming elections, it doesn’t have a vast array of options,” says Stephanie Kleine-Ahlbrandt, Northeast Asia project director for the International Crisis Group. The U.S. will press for a presidential statement from the U.N. Security Council condemning the launch, but cannot expect a resolution or further sanctions against North Korea given China’s reluctance, she says.

China helped steward the leap-day deal, and following North Korea’s decision to pursue a satellite launch, it has urged calm on all sides but avoids condemning the move. On Wednesday Chinese President Hu Jintao congratulated Kim after he was named head of North Korea’s ruling Workers’ Party, a sign that Beijing’s traditional alliance with Pyongyang is a primary concern. China didn’t abandon North Korea after its 2009 satellite launch, and it’s unlikely to do so now.